A change in approach: Giorgia Meloni, the prime minister of Italy, is buried in debt and is selling her “crown jewels.”

Formerly adamantly opposed to the privatization of public assets, Prime Minister Giorgia Meloni is leading Italy through a radical change in policy. Her administration intends to sell its holdings in important national companies, including as the energy giant Eni, the rail giant Ferrovie dello Stato, and the “crown jewel” Poste Italiane.

This push toward privatization, which aims to raise 20 billion euros ($21.6 billion) in funding by 2026, is a daring attempt to reduce Italy’s massive public debt.
“Our approach will be light-years away from what we have seen in the past, when privatisation rhymed with gifts for lucky entrepreneurs,” Meloni said last week.
“We can sell some stakes in public companies without compromising public control,” she said.
Her 2018 statement, which was made four years before she became prime minister, is different from her decision to sell off a chunk of the postal service to foreign investors. “I oppose Poste Italiane’s privatization. “It is a precious gem that needs to stay in the hands of Italians,” she said on Facebook at the time.
The far-right League party led by Matteo Salvini is part of Meloni’s partnership, which has drawn harsh criticism from the opposition for wanting to privatize assets held by the government.
According to Andrea Orlando, a center-left Democrat Party lawmaker, the government “always claims to be for the homeland and today it is starting to sell the homeland,” she said on Sunday.
Analysts are nonetheless pessimistic about the effect of these measures on Italy’s enormous debt burden, which has surpassed 2.8 trillion euros ($3 trillion), a startling amount that ranks second only to Greece in terms of GDP ratio inside the eurozone. Meloni’s approach, which is being hailed as a break from previous sell-off tactics, seeks to maintain state power while encouraging foreign investment.
Ownership transformation
However, the present proposal calls for cutting the state’s stake in Poste Italiane from the intended 51% to as little as 35%. Opposition groups have accused the administration of compromising national interests, which has sparked harsh criticism.
The sale of a quarter of Monte dei Paschi di Siena is the first step in the privatization drive, which is a component of a larger fiscal consolidation initiative. These actions, however, are questioned due to their little impact on the debt-to-GDP ratio and worries about losing a significant amount of dividend revenue from these lucrative endeavors.
Market gyrations
Given its history of missing privatization deadlines, Italy confronts historical obstacles in its quest to draw in international investors and diversify ownership. According to central bank statistics, Italian administrations have a history of missing privatization objectives, with annual profits from the sale of public assets averaging less than 0.1% of GDP. The government is negotiating a complicated financial environment as it deals with the pandemic’s aftermath and upcoming strict EU budget requirements. The complexity of the situation is increased by Poste Italiane’s extensive activities and its recent involvement in tax credit scams.
Italy seeks to strike a balance between economic needs and national sovereignty in this high-stakes financial reorganization, an undertaking with significant political, economic, and social ramifications. The conclusion of this audacious plan is still unknown as the administration moves ahead with its privatization program; the country’s budgetary stability and national integrity are at risk.